>> unfortunately they put the answer up early. for me whales and lobsters. i would have said lobsters, that is not right. stuart: i'm afraid they showed me the answer before going into the segment. it is whales. the first whales appeared 50 million years agos well after the extinction of dinosaurs. we know the dinosaurs disappeared because meteor eight h struck the gulf of mexico. >> you didn't cover it, didn't you? stuart: you lived in arizona? you were in yuma, arizona. >> yuma, arizona, you name it, i lived there. >> great guy. thanks for all the hard work, ash. my time is up for me. that is it for "varney & company." "coast to coast" starts, wait for it, now. neil: all right. we know of course that the president of the united states

speaks tonight but someone perhaps more important, when it comes to your money, far more relevant, he speaks minutes from now. i'm talking about jerome powell, of course. say the markets will hone on what the fed chairman has to say later this hour, a lot more than anything the president has to say later this night because the president's speech is scripted, as are all presidents state of the union addresses. powell's remarks this afternoon are not. he is conducting a interview. it is a free form economic chat. doesn't mean they get nasty, but they get real. they get to the point. don't expect powell to weigh in on chinese weather balloons, but expect him to comment on the impact of the world's two largest economies now at each other's throat. powell might not be the first to say things could get nasty. but he could be the first to spell out how nasty and wore, you who expensive too for both countries and the world. welcome, everybody, i'm

neil cavuto. a lot at stake for mr. powell to put it mildly, flying without a prompter and a net. that is everyday life for edward lawrence who joins me from the white house. edward. >> reporter: no net at least. we are hearing within the last hour or so that the president will reference that chinese spy flight that came over the united states but just a reference is what we're being told. now the president, we will not see him until that economic address, i mean the address at the state of the union tonight. in that address there willed be a huge economic component we're told that will highlight the accomplishments the president believes he is not getting credit for. >> the state of the economy is strong and that you know, you see that in the lowest unemployment rate in 53 years. you see that in the most jobs created in the last two years in our country's history. you see that in historic progress in equitable recovery. you see that in the wage growth that we have seen being disproportionately going to the those in the lower half the

income distribution. >> reporter: but americans see inflation which spiked under this president when he came into office. 1.4%. it is down from the peak when the president started imposing his policies on this economy. representative jim jordan saying the president led the country down the wrong path. >> we have a border not a border. we have record crime. we have record inflation. we got bad energy policy. go figure. there were some decent economic numbers here recently on job creation. that's fine. i always cheer for the american economy but i would argue that is happening in spite of the stupid policies from this administration not because of. >> reporter: one of the main reasonses is coming down is the federal reserve has increased the, there you see the federal reserve rate increases. eight meetings in a row, half of those have been 75 basis points. the federal reserve has never moved this quickly slamming on the brakes for the economy. again we'll get some more headlines as you mentioned out of that conversation that

jay powell, the fed chairman, is going to have in about 30 minutes. back to you. neil: thank you for that, edward. let's go to david wagner, portfolio manager, also got larry glazer, mayflower advisors managing partner. david, begin with you then. the markets on tenterhooks waiting to hear what mr. powell has to say. it is an unscripted for mat. he is asked questions. obviously things will come up with relations in washington but do you think he will eschew the whole split called stuff? >> i don't think he will touch base on that at all to be fully honest. the big question what jerome powell will be attacking today, will there be push back from market reaction to the february 1st commentary, the february 1st fomc meeting? he took kind of a mini victory lap, disinflation, of seven months. unemployment rate hit a 50-year low. i think he will come back a

little bit hawkish, like in august, september, during his conference at the end of november. to kind of give pushback to the market, hey you're being a little too optimistic right now. i know the market is pricing in two rate cuts in 23. i think he comes back you're too optimistic. we'll stick to the course and make sure we keep tight policy through the end of the year. neil: you could be right, david, larry i will pure this a little more with you as well. i think often times there is jerome powell put in the market put in. he speaks or get statements he spoke six weeks prior when we get the fomc meetings. he can take the party out of a party very, very quickly. to the points david was mentioning that the markets, those few who still harbor the relief he will reverse policy, by the end of the year start cutting rates, do you think he will clarify that, say that just ain't happening? >> you know, neil, today is shaping up -- neil: go ahead, larry. this is for larry.

>> not because of the state of the union. not because of the state of the union, it is because jay powell's speech. the market wants to see reaction to the ink credibly strong jobs report we saw. look, there is competition going on between the fed and rest of washington. that competition, it is a bigger competition than adele and beyonce. this is jay powell, joe biden. jay powell, firm hand on the tiller, steady as she goes, raising rates, looking the market in the eye. he has been the dirty harry of fed chairman. when you have a 50 plus-year low in unemployment, you've got problems. you have got to continue to address the issue. raising rates will not put more nurses in hospitals. it will not create more teachers, more truck drivers. we have the issue to deal with. it's a challenge for jay powell. look even more so, we know that recognizing there is a lot of political issues here, the fed has done incredible job staying in their lane.

they will do that today. jay powell will focus on inflation. he has his plate full dealing with inflation and this economy, not derailing things. neil: you could flip it around, gentlemen, and david, i will throw this back to you, he achieved the soft landing looks like more than he has than last week at this time before we had the employment report for january, what do you think? >> yeah, i think the market believes that we're heading more towards a soft landing but actually if you look at pmi data it is coming down much faster than what you're seeing inflation come down. neil, at its core, what is the definition of a soft landing? when inflation comes down much faster than growth. that is what the market is believing right now and i think that what jerome powell will give some type of pushback. he noted over last eight tightening cycles, stay in restrictive policy, i.e., keeping rates above inflation for quite some time for it to flow through the system to, reap the benefits of some type of tightening policy whether

increasing the federal funds rate or type of qt to decrease the balance sheet here. neil: i don't see that changing very quickly. in other words, that the debt still out there, he will try to deal with that because it's a still a large balance sheet. larry, your view is that the fed shouldn't be taking any victory laps here, right? no matter what jerome powell says, that strength in the labor market will translate into wage pressures. the funny thing is, those wage pressures have subdued even with the record number of jobs in this latest month. i'm wondering if it is all balancing out? that losses sort of have things back in control, not fully, not pre-covid but certainly the most since covid broke? >> i think you make a great point, neil. this is not your grandfather's recession. we don't have a high unemployment rate along with the high inflation. we have got is something very different. we should recognize it's a much more complicated situation and

also recognize innation for goods may have come down regardless of what the fed did. it may come down just with supply chains normalizing, just with china reopening which was a surprise to the markets. so the fed is raising rates with traditional tools and it is creating an inverted yield curve. it may be creating more challenges and problems than it is solving because goods inflation may have been addressed on its own without the fed action. neil: we'll watch closely, david, larry, thank you both very, very much for weighing in on all of this. we'll hear from the fed chairman in the back and forth at the economic club of washington in 20 minutes or so we'll be diving in and out of that. almost anything jerome powell says especially these days will carry particular import. we're all over that. we're all over the president's big speech tonight the state of the union address, sort of like halfway through his presidency, sort of rallying cry that things are going a lot better than americans polled on the subject think. why oklahoma senator markwayne mullin isn't quite convinced after this.

[ marcia ] my dental health was not good. i had periodontal disease, and i just didn't feel well. but then i found clearchoice. [ forde ] replacing marcia's teeth with dental implants at clearchoice was going to afford her that permanent solution. [ marcia ] clearchoice dental implants gave me the ability to take on the world. i feel so much better, and i think that that is the key.

if your business kept on employees through the pandemic, getrefunds.com can see if it may qualify for a payroll tax refund of up to $26,000 per employee. all it takes is eight minutes to get started. then work with professionals to assist your business with its forms and submit the application. go to getrefunds.com to learn more. (vo) the fully electric audi e-tron family is here. with models that fit any lifestyle. and innovative ways to make your e-tron your own. through elegant design and progressive technology. all the exhilaration, none of the compromise. the audi e-tron family. progress that moves you. dad, we got this. we got this.

we got this. we got this. we got this. yay! we got this. we got this! life is for living. we got this! let's partner for all of it. edward jones i screwed up. mhm. let's partner for all of it. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck.

♪. neil: all right, we are getting some brand new pictures right now concerning the navy collecting that chinese weather

balloon they say, spy balloon we say from the atlantic on sunday. jennifer griffin has more from the pentagon. jennifer. >> reporter: neil, the fbi is analyzing the debris from the chinese spy ship at their labs in quantico, virginia. the u.s. flew two u-2 spyplanes when it was going across the u.s., collecting intelligence capabilities and transmitting signals. the chinese balloon spent minutes, not hours over territorial waters over the aleutian islandses in alas can and crossed into canada. the head of northern command explained why he did not order the balloon shot down when it entered alaska. >> my assessment this balloon did not present a physical military threat to north america. i could not take immediate action because it was not demonstrating hostile act or

hostile intent. >> reporter: these new photos show ongoing rescue efforts, the u.s., navy and coast guard are using unmanned underwater vehicles with side scanned sonar to further locate sunken debris off the coast of south carolina. dives are scouring the ocean floor in icy temperatures. the debris field is 15 football fields wide in water 47 feet deep. the general said they failed to detect previous incursions from the chinese spy craft into the united states. >> my responsibility to detect threats to north america. i will tell you that we did not detect those threats and that is a domain awareness gap that we have to figure out. >> reporter: admiral harris was commander of u.s. pacific command during the trump administration. he just told the house armed services committee, recovering these parts will help the u.s. learn more about china's

capabilities. >> we need to understand more fully the prc, the chinese surveillance capabilities and systems. shooting down that drone, recovering the parts over the atlantic i think is very helpful in that regard. >> reporter: the pentagon only learned of these balloons recently and began examining them more closely four months ago after a chinese spy balloon crashed into the ocean near hawaii. that's when u.s. intelligence began looking backwards through images and data and realized there had been other chinese balloons that crossed briefly over u.s. territory which explain why trump administration officials and senior pentagon leaders did not know about these prior incident until recently. neil? neil: jennifer griffin, thank you very much for that. want to go to senator markwayne mullin, right now, the oklahoma republican senator. good to have you, sir. i don't know if you had a chance to listen to general glen van herk, that the shoot down of

that balloon. >> i did. neil: he made the call to wait until it was over water, that is cutting to the challenges. what did you think of that call? >> listen he can get direct orders from the commander-in-chief joe biden and joe can tell him to shoot it down if he wanted to. i think it was plausible deniability where everybody in the, in this administration is risk adverse. what they want to do is not take responsibility. if the president was really going to be strong in national defense and instead he is extremely weak he would have said bring it down. guess what? they would have brought it down. neil: all right, but the general then saying we don't think the conditions warrant taking it down right now, that was a mistake. >> absolutely. i don't think they were actually looking, neil, at our military sites which is what his focus is. i think they were looking at our infrastructure, specifically, specifically our infrastructure when we're delivering crude and petroleum products from alaska to the lower 48.

if you look at the flight pattern, where it came from, where it crossed it is very suspect to me. why that was flying that pattern when they say it is out of control, i don't believe it was one bit. and they say that the maimings, images balloon picking up could be brought up with a satellite, that is not true. the high resolution of this balloon is capable of doing, if it is one they sent out before, the capabilities of this is much better, much clearer. i think they were obviously wanting to see if they could disrupt the supply of petroleum products just in case we went into a conflict with them. neil: senator, i'm curious what you make, this is something else the general also mentioned, talking about glen vanherk, there had been three other balloon incidents spotted near u.s. bases during the trump administration. folks who i interviewed who served in the trump administration either as secretary of state, the defense secretary, what have you don't recall any of that.

doesn't necessarily mean that it didn't happen. they were not aware it was happening but what do you make of it if it did happen? >> well i don't believe it did. i sit on the house intelligence committee. we were never briefed of it in readiness is, i was ranker of the committee. so i would have most definitely been informed in this particular case. i think the committee as a whole would have been. you heard ratcliff say he didn't know. you heard pompeo say he didn't know about it so i don't think it actually happened, if it was actually in our airspace. could it have been over the pacific, someplace? maybe. but it is the first anybody in the trump administration or in congress had ever heard of this. neil: so it is possible it could have happened. we weren't aware of it. >> possible but -- neil: only by chance did they discover this under the biden administration. >> right. neil: i'm wondering if we knew as the general said to shore up, tighten up our security efforts and what gets into this

country's airspace? >> if it did happen that's a problem and if it did happen, then the chinese knew about it and they were taking, they were taking advantage of our vulnerabilities kind of like they're taking advantage of our southern border right now. we can get into that at a different date but it is definitely a huge concern of ours. listen, the cold war is fresh now. instead of it being with russia, it is with china. it is much more dangerous and much more consequential at this particular time. they're spying on us. they're looking at our infrastructure. they're purposely doing this. then for us not to make decisive decisions when it was exposed, and took us eight days to shut it down shows weakness. it is not reagan era with peace through strength t shows absolute weakness. for them to shoot off their mouth it will have consequences they reserve the right, we should have shot it down immediately and told them if they ever send something else over here we have the right to retaliate back over your own

property and your own air space. they would have done the exact same thing to us because they have. remember, we have accidentally flown in with surveillance planes and they have literally got up with their jets and forced us to land. we had to negotiate to release of our pilots. and so for them to even say anything about a balloon is hysterical and ridiculous and the president should have been much stronger in his response to this. neil: we'll see what happens next. what we do, what they do, how we react to what they react to it, it's nuts. senator, thank you very much for taking the time. senator markwayne mullin. meanwhile so many hearings are going on capitol hill, an unusual number but there is one concern what is going on at the border. this one is a little different because some border patrol agent are being allowed to testify what is happening there. we don't know how free they are to speak their mind. they're there to supposedly speak their mind. what are they saying? after this.

♪. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq >> woman: why did we choose safelite? >> vo: for us, driving around is the only way we can get our baby

to sleep, so when our windshield cracked, we needed it fixed right. we went to safelite.com. there's no one else we'd trust. their experts replaced our windshield, and recalibrated our car's advanced safety system. they focus on our safety... so we can focus on this little guy. >> singers: ♪ safelite repair, safelite replace. ♪ three nights, esg... the broker will take your bonds. -diversification, futures, options. fiduciary. leverage. [whispering] -frothy markets. psst. virtual real estate is a lock. ♪ cold hard cash ♪ j.p. morgan wealth management knows the world is full of financial noise. i'm looking at your asset mix and plan. you are right on track. great, thanks. our easy-to-use app and local advisors are here to help you figure out what's right for your investments. j.p. morgan wealth management. ♪

♪ ♪ ♪ ♪ ♪ choosing miracle-ear was a great decision. like when i decided to host family movie nights. miracle-ear made it easy. i just booked an appointment and a certified hearing care professional evaluated my hearing loss and helped me find the right device calibrated to my unique hearing needs. now i enjoy every moment. the quiet ones and the loud ones. make a sound decision. call 1-800 miracle now, and book your free hearing evaluation.

i remember when i first started flying, and we would experience turbulence. i would watch the flight attendants. if they're not nervous, then i'm not going to be nervous. financially, i'm the flight attendant in that situation. the relief that comes over people once they know they've got a guide to help them through, i definitely feel privileged to be in that position. ♪

♪. neil: all right. this is an intriguing development going on on capitol hill. a hearing with border patrol agents allowed toe testify what is going on the border. there was a move homeland court secretary mayorkas for forbid them to speak. apparently that is not the case today. i don't know all the details but chad pergram does. he is on capitol hill. chad. >> reporter: gop says this is the first time border agents testified on capitol hill since president biden took office. republicans are using the hearing to highlight the border ahead of president biden's state of the union speech tonight.

they want to underscore the scope of border crisis. >> my experience in tucson sectors, last year we seizedhundred pounds of fentanyl, to give you an idea based on the lethality after dose of fentanyl that is enough to kill everyone in arizona 21 times for basically half the population of united states. >> reporter: border agents says they're seizing more fentanyl than recent years, because of increased agent training and dogs finding fentanyl. >> i don't want the fentanyl in this country. it is dangerous and kills people t t makes our communities dangerous. this is a sign our border patrol and our agents at our ports of entry which is of course where the vast majority of the fentanyl has seized you acknowledged are doing their jobs. >> reporter: committee democrats began the hearing with a controversial treat, that using the hearing to amplify white

nationalist conspiracy theories instead of on the border crisis. >> i'm going to cut tote chase, from my colleague own the other side of the aisle we're using this hearing for white nationalism, i'm not doing that. so if you feel that strongly, come over to this side of the room an let's talk about it space to face. leave that silly stuff for somebody else. >> reporter: some conservatives want to impeach homeland security alejandro mayorkas over the border. it is unclear if the house would have the votes to do so or if house speaker kevin mccarthy wants to go there. neil. neil: thank you for that, chad. want to go to mark meredith at the white house right now. almost as soon as the president of the united states is done with his state of the union address, he fans out goes to places like wisconsin and so do a lot of the people who work for him. what's the latest? what are you hearing mark. >> reporter: good afternoon to you, president biden says he intends to run in 2024 but tonight's speech with millions

of americans to watching may be his best chance to make his case why he believes he could get something accomplished if he were to get a second term. the white house has yet to say when they would make an official announcement about the campaign plans. in recent weeks we have seen a west wing shakeup, some strong campaign signs already underway, however polling suggests that the public may not be thrilled with another four years. want to show you two polls. the first shows the president's jobe approval rating remains under water, 54% of people disapproving of his job performance. those numbers up sharply when he took office. another poll i want to show you, ap poll, even 62% of democrats do not want to see the president run again. now the ap explains there may be another issue behind all of this which may hurt biden's appeal with democratic primary voters that is his age. ap writing the oldest president in u.s. history biden has been dogged by questions about his age he would be 86 years old if he serves a full eight years as president. republicans are likely to make

age a big part of their down ter punch going into 2024. we don't know, neal who the republican nominee will be yet. there is no guarranty the age argument will work. we'll listen to see if there are hints about the campaign rollouts. odds are we're still probably a few weeks away from that, neil. neil: thank you my friend. mark meredith following all of that at the white house. mark penn with us, former klein ton advisor. mark, what do you make of the polls, reaction they get from the white house they have not done as effective job selling the good they're doing with the economy? that is how they frame it. >> well, look i think the polls that we just saw are accurate. the president is underwater. a lot of people don't want to, including democrats see him run again. this speech is his best opportunity, with probably 45 million people who may watch, to begin to push back on those element to show that he is

vibrant enough to run and, as we did, as you may remember in the '96 state of the union, everybody thought the economy was bad and we really actively disputed that. he has got to take lower inflation numbers, the job, the job ratings, the fed tapering off somewhat, the lowest unemployment and put that together in a case that things aren't as bad as people think they are because the two blockers to him winning re-election are, first they think he is too old and too weak as a leader and second, the economy is really perceived by 63% or more of this country as in the dumps. neil: you know, a lot has been said about who is leaking out information hostile to the president, that he maybe shouldn't consider a run but i'm hearing a lot of it happening within the democratic party, mark. i had a chance to speak to jim clyburn, south carolina congressman, so influential getting joe biden elected president in the first place.

remember the role he played in south carolina. now the greater role south carolina has as a kickoff primary for democrats. we talked about someone else in the administration though when it came to who has popular support within the party. i want you to react to this do you think kamala harris should still be his running mate? >> well i will leave that up to him. contrary to what people says i never told him anything about who ought to be on his ticket. i read this stuff all the time. neil: yeah. >> i believe very strongly that candidates for president or in governor, name it, they should pick the people they are comfortable with. neil: you know that is hardly a ringing endorsement for kamala harris and we heard the same out of elizabeth warren. we kind of heard the same out of, you know her well, hillary clinton. what is going on here? >> well, the vice president's

polling is really below president biden's. she really hasn't caught on. she is really not seen as effective and people worry that if he does go for a second term is she ready to be president? that question would be a big question. i think there are two things going on. one as i just said, is she ready and two, a lot of democrats are kind of jockeying here and they know if biden in the end doesn't run or gets defeated in an early primary, that she's the, that harris is then the front-runner. so they're also jockeying for position themselves because this is really wide open democratic party when it comes to who they think should be the next nominee. biden has some of the lowest numbers i have ever seen for a sitting president who is liked but they just think he may be too old for another term. neil: on the vp thing, mark, there used to be a time where presidents routinely switched their running mate. fdr did it a number of times.

ended up with harry truman got the job when fdr sadly died. so it has been a while since we've seen a switch. but it used to be quite common. could you see this president making such a switch? >> well, i think you're right. it used to be, well you were lucky if you got to be a second term vice president. neil: that's right. >> look the president had a great opportunity here to appointed harris to the supreme court and picked the new vice president but he didn't take that as an option. i think he is hard-pressed given the historic nature of the appointment to switch it out. i think if i were harris and harris' folks i would be working hard to pick some issues that you can run with and show that you are competent and ready to stand up because she is the number two person in the democratic party. neil: yeah. heartbeat away as they say, mark penn, always good seeing you. in the meantime we're keeping our eyes on that big event in

washington. jerome powell sitting down with david rubenstein. it's a q&a. it is share our ideas. hasn't quite kicked off. we'll watch it closely, if you think about it, he is called the adult in the room, because you have congress bickering, the president and congress still at odds. now this whole china balloon thing that complicated that relationship. in the middle of that you have jerome powell the federal reserve chairman how he navigates those waters at least moves on despite the waters. i guess he is is trying to say he is in different waters after this. ♪.

known as a loving parent. known for lessons that matter. known for lessons that matter. known for being a free spirit. no one wants to be known for cancer, but a treatment can be. keytruda is known to treat cancer, fda-approved for 16 types of cancer. one of those cancers is advanced nonsquamous, non-small cell lung cancer, where keytruda is approved to be used with certain chemotherapies as your first treatment if you do not have an abnormal "egfr" or "alk" gene. keytruda can cause your immune system to attack healthy parts of your body during or after treatment. this may be severe and lead to death. see your doctor right away if you have cough, shortness of breath, chest pain, diarrhea, severe stomach pain, severe nausea or vomiting, headache, light sensitivity, eye problems, irregular heartbeat, extreme tiredness, constipation, dizziness or fainting, changes in appetite, thirst, or urine, confusion, memory problems, muscle pain or weakness,

fever, rash, itching, or flushing. there may be other side effects. tell your doctor about all your medical conditions, including immune system problems, if you've had or plan to have an organ or stem cell transplant, received chest radiation or have a nervous system problem. depending on the type of cancer, keytruda may be used alone or in combination with other treatments, and is also being studied in hundreds of clinical trials, exploring ways to treat even more types of cancer. it's tru. keytruda from merck. see all the types of cancer keytruda is known for at keytruda.com and ask your doctor if keytruda could be right for you. ■ if you're happy and you know it, clap your hands. ■ ■if you're happy and you know it, ride your bike. ■ ■ if you're happy and you know it, then your face will surely show it. ■ if you're happy and you know it, smile big and bright. ■ thousands of kids just like me, are happy every day. and it's all because of generous people like you,

who support shriners hospitals for children every month. all you have to do is call the number on your screen or go online to loveshriners.org right now with your monthly gift. because of people like you shriners hospitals for children is able to make an everyday miracle happen for kids like me. ■ if you're happy and you know it, dance around. ■ ■ if you're happy and you know it, play a song. if you're happy and you know it, ■ and your face will surely show it. ■ ■ if you're happy and you know it, take a shot. ■ and when you call or go online right now to donate $19 a month or more, we'll send you this adorable love to the rescue blanket as a thank you and a reminder of all the smiles you're bringing to kids faces every day. will today be the day you send your love to the rescue? when you call the number on your screen right now

and give as little as $19 a month, just $0.63 a day, you'll be making a life changing difference for a child just like sarah. your monthly gift today could change your life forever. because of you, we are happy and we know it. thank you. thank you. thank you. thank you. please call or go online right now to give if operators are busy, please wait patiently or go to loveshriners.org right away you'll always remember buying your first car. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine. ♪. neil: all right the layoffs continue in the economy. the latest is zoom right now. 1300 jobs, represents about

15 percent of the workforce the all this within the same 24 hours of boeing agreeing to cut 2000 largely white-collar workers. again you see more and more of these layoff announcements, big in terms of sheer numbers. small in terms of average percentages. the average company layoff in this new year, as representatived about five to 7% of the overall workforce. as i was just saying in the case of zoom, up to 15%. anyway, that is the backdrop for an improving job situation in general that the president is expected to crow about tonight in his state of the union address, including the labor report for the last month that showed unemployment rate itself going back to levels when richard nixon had become president. art laffer was not even born at the time but the former ronald reagan svengali joins us right now to weigh in on all things state of the union, all things jerome powell, this conversation coming up in washington. i'm cure curious, art, the job

backdrop, the administration rightly crow you can't have a recession with better than half a million finding jobs, i get that, but this constant sort of bloodletting and job dismissals, that are continuing throughout, what do you make of it? >> let me first correct you if i can, neil, i was in the white house with nixon during that period of time. so i go back, way, way back. that's all right. neil: you look so young. >> yes, thank you, thank you. i was george shultz's right-hand person back then. when you look at it right now, the economy, the last month's jobs report was great, phenomenal. i think that also helps powell. i know powell doesn't believe it does. that jobs report with 500 some thousand on the household, 800 on establishment, vice versa. it's a great, great jobs report. average hours were up, all of that. when there is increase in the

supply of goods and services that tends to pull down inflation, not cause it. putting people back to work is not inflationary, just for the record. and also, if you look at it, the numbers that are dropping off, the cpi numbers, year-over-year, will bring that number down quite dramatically over the next four or five or six months. it will be quite a dramatic drop. the background here for powell is very good. the background for biden is very good. my question i ask why does powell take this occasion just before the president of the's state of union address to have a interview with david rubenstein? that is confusing to me. neil: i asked that, it was argued before we got the date of the president's state of the union address. i don't know if that is accurate but what we're hearing. we're watching the fed chairman with david rubenstein. we're monitoring what he is saying but i wonder what he is going to make of what the president will likely be talking about, including plans for

quadrupling this 1% tax on stock buybacks that he wants to see, a further tax on billionaires. in other words, he is going to go there yet again. that is a tough thing to sell right now but your thoughts. >> it is. well you know, i don't think that powell should go there, i don't think he will go there. he made it very clear recently he will stay in his own lane, neil. that means controlling inflation. doing all he can to help the economy. i thought it was really instructive when he said he would not do global warming policy or any of this other stuff. i think he will stay in his loan lane and not mess around with tax policy. what biden is doing with raising taxes on the rich, doing all of this other stuff is just crazy. when ever we raise tax rates on the rich, neil, when we done that, the economy have slowed, the poor have been hurt the most, revenues have fallen. that is the record. that comes out in my book that just came out, taxes have consequences. it documents it every single

time from 1914 on. 1913 they raised taxes revenues did increase, but other than that they didn't. the economy worsened and the poor were the most damaged in that group. so why biden keeps going on this route it has to be purely politics, internal politics, not external policy. no one like as tax increase. neil: art, thank you for that. i'm cutting away early, my friend, jerome powell is addressing some of the very issues right now with david rubenstein. let's go to washington peek in what they're saying. >> would help me to know it the night before. >> markets after your speech last week, the markets assumed therefore there would probably be another 25 basis point increase in your next fomc meeting. was that a bad assumption by the markets? >> so, again what we said at the meeting was, was that we believe

that, we anticipate is what we said that ongoing rate increases will be appropriate and the reason is we're trying to achieve a stance of policy that is sufficiently restrictive to bring inflation down to 2% over time. we don't think we've achieved that yet. so we said that and you know, now you see the labor market report. i think, again financial conditions are more well aligned with that than they were before. >> so the assumption when you made your speech that probably, fed might even consider decreasing rates by the end of this year, the markets no longer assume that, you think the markets are wrong? >> well, so let me say these are, all of these numbers that we're throwing around here are conditional on incoming data and what happens. so we never say this is what we think will happen. we make a tentative forecast. then we let the data come in. for example, if the data were to

continue come in stronger than we expect, we concluded we needed to raise rates more than priced into the market, we wrote down in last group of forecasts in december, we would do that, we certainly would raise rates more. >> so today, for people not familiar with the fomc who is actually on the fomc? >> the u.s. central bank consists of a board of governors here in washington. there are seven governors. knows governors are nominated by the president and confirmed by the senate and we serve terms that are not synced up with the election cycle. so we're independent. there are also 12 reserve banks around the country which have a degree of independence. so each reserve bank is led by a president who works there full time. all 12 of them sit on the fomc. so that is 19 people sit on the fomc. it is quite a large committee which 12 vote in any given year. reserve presidents rotate basis

except new york vote votes for every year. >> do you vote at the beginning of the fomc meeting, have discussions afterward or you wait until the end to vote? >> we vote at the end. the fomc meeting process takes more than a week. i talk to all 19 participants, 18 other ones. staff sends out memos. something called teal book that has monetary policy all of that. we have ex-extensive discussion on the first day of meeting about the economy. everybody talks about. second day we talk about monetary policy. then we vote on monetary policy around noon the second day. >> so does the chairman of the federal reserve board speak first here is what i think or does he wait until the end, thanks for what you think but let me tell you what i think? what do you do? >> different chairs have done it different ways. i tend to do what my immediate predecessor did i think. here is what i do, i speak last

on the chicago round. everyone else talks about what they think about the economy, in their district, for example, if they're a reserve bank president. i listen to all of that and then i give my comments at the end. i sum up what people have said. then i speak first on monetary policy. >> okay. so you said inflation rate target is 2% but why 2% and not 3%? 3% could be tolerable really. for most of organized history 3% is considered okay. why do you want 2%? >> 2% is the global standard. that is our objective. 2% as measured bit pce index. that is not something we're looking at changing that. that isn't going to change. >> that is not going to change, no. >> okay but you need to get to 2% and your goal to get there by what period of time would you like to get there? >> well we say that we're using our tools to get there over time. if you look at our forecasts we expect 2023 to be a year of

significant declines in inflation. it is actually our job to make sure that is the case. but i would tell you, that with inflation headline pce inflation is running about 5%. this is on a 12th month basis. core is running at 4.4. my guess it will take certainly into not just this year, but next year to get down close to 2%. >> so 2% is firm? you're not getting off that. >> yes, we're not. >> so the theory of raising interest rates is that it will decrease economic activity and increase unemployment. you've been increasing interest rates for a while, unemployment is a record low. what is wrong with the theory? why is unemployment not getting higher? >> labor market is strong because the economy is strong. as i mentioned it's a good thing we're beginning to see disinflation without seeing labor market weaken. there is a lot of demand for

workers. if you look at the supply of workers versus demand for workers, demand for u.s. workers is five million greater than the available supply, the available supply consist of people either working or actively looking for a job. this was not the case before the pandemic. the pandemic really had a significant lasting mark so far on labor supply in the united states. labor force participation rate came down. there now is a shortage of workers and it feels, almost feels more structural than cyclical. so that's a significant issue. >> now you resisted i think saying what unemployment rate would be acceptable to you, i think but is there an unemployment rate that you think would moderate inflation such that you would tolerate unemployment at 4%, 5%, 6%? >> i guess i think about it this way, you know, we have two goals that congress has assigned us, maximum employment and price

stability. price stability as we agreed is 2% inflation. maximum employment means, if you want a job you can get one. so right now the labor market is at least at maximum employment but many would say it is out of balance with more demand than there is supply. what we're trying to do get inflation down. we're not targeting a different unemployment rate. we're trying to use our tools to get inflation to come down over time. >> in hindsight would you say when covid hit the economy, we injected five trillion dollars of fiscal policy into the economy and the fed did quantitative easing and other related things, kept interest rates very low, would you say in hindsight that was mistake or right policy at the time? >> you have to go back to the decisions that were made in real time. it was something nobody ever seen. the global economy came to virtual stand still. people were talking about depression. we didn't think we, we had no idea when we would get vaccines that worked.

so congress took very strong measures and we took very strong measures and you see where the economy is. you have got a very, very strong labor market but you have high inflation. as i said we're at beginning to get that down. if you look around the world at other countries, they're experiencing high inflation even countries that didn't do as much as we did from fiscal or monetary standpoint that tells you a big part of inflation is related to the pandemic itself, the shutdown and then reopening. that is a big part of it. >> the quantitative easing program has increased balance sheet of the fed, and what is your balance sheet now? >> i think it is $8.4 trillion. >> you must sound like you know. 8.4 trillion. >> that was yesterday's number. >> 8.4 trillion. what would you like it to get down to over the next year or two? is there some lower number? >> so we are in the process of shrinking the balance sheet actively, passively i should

say. what happens is, treasury securities on our balance sheet mature up to a cap, a monthly cap we, balance sheet shrinks in that amount, same thing with mortgage-backed securities as they are prepaid. so the balance sheet is shrinking. in terms of the target level of it, we have not put a specific dollar number on it. the idea we're in a regime of ample reserves. reserves are basically deposits at the reserve banks. if we get closer to the level, we feel reserves are ample, kind of where we were before the pandemic, we'll slow down and we'll sort of test where we are. it will be a couple of years until we think we get to that level. >> the fed does not sell securities. it waits for them to mature. then you just cash them in, right? you're not in the market selling securities that are not yet mature, is that correct? >> that is correct. it is also correct that we would consider sales of mortgage-backed securities. i will tell you that is not something on the list of active

things, things being actively considered. >> some people are worried about the federal debt limit and we might not be able to extend it on time. we have $31.4 trillion of debt. are you a little worried about the debt limit not getting extended? >> so the debt limit is really something for the fiscal authorities to deal with. the fed, our only role we're the fiscal agent of the treasury department. we're not a policymaker on that. i will just say this, this really can only end one way. that is with congress raising the debt ceiling in a timely fashion so the u.s. can pay all of its bills when and as due. that is what has to happen. if that doesn't happen, no one should think the fed has the ability to shield the financial markets or economy on consequences of moving too slow. >> you don't have any program in place ready to go if in fact the debt limit isn't passed in time? >> this is something congress has to deal with. >> the so-called trillion dollar gold coin solution is not one you're in favor of i guess?

>> as i said, this ends in only one way, that way is congress voting to raise the debt ceiling so the u.s. can pay all of our bills. >> in terms of consultation, do you consult regularly with the treasury secretary, head of national economic council or congress or how do you relate to the administration. >> for a long, long time, 60, 70 years, there is weekly breakfast or lunch with the treasury secretary and fed chair. that is what i had with treasury secretaryies as fed chair. i have regular lunches with the head of the nec. we have regularly scheduled lunches with the council of economic advisors. that is the institutional structure of our contacts with the administration. >> if the fed would could you reconstruct the operation of the fed, would you change the legislation in any way? do you think the fed operates in

a way that you can sufficiently operate? >> we're not looking for any changes to the federal reserve act. it does work. the structure i discussed earlier with 12 reserve bank presidents coming in, what that assures, it really institutionalizes diversity of thought. we have different people coming in with difficult backgrounds, different can requires. they think different ways. i think that is enormously beneficial to our decision-making process. >> there is discussion recently about some fed members, fed board presidents selling their securities and maybe not doing everything they were supposed to do in terms of disclosing it. what have you done to fix that process? >> we put in new system and a new set of rules in place which i think are best in class for a public institution like the fed. you know, the innovations were that if someone wants to sell something that they own or buy something they have to clear that in advance with staff at the board of governors. then you have got to wait 45 days for that to execute.

you can't own individual stocks and you can only do, only thorize these transactions or execute them during specific times. you know, we, all of these are disclosed. if your idea is to trade things buy and sell them because you think, you think this stock is cheap and that kind of thing, that is not just something that will work. >> what is the salary of the chairman of the federal reserve board? >> it is around $190,000 i believe. >> so you live on the $190,000. if you need it sell something, what do you do? you have to clear it for 45 days? >> that's right. we have family expenses that if we have them that exceed my salary then we have to sell an asset. >> is that a fair salary for the job? >> i do, yes. >> so today, how do you coordinate with central banks, let's say in england or japan or china? do you have regular

conversations with them about what they're doing? >> we do. yeah. i meet six times a year in switzerland with the heads of all the, many, many central banks. even the small, medium-sized ones in basil at the bank for international settlements. in addition among the major central banks i have regular dialogues going with most of them and so, we're talking though about is, really what is happening in the economy and how are you thinking about policy, that kind of thing. it is very important that we keep those discussions going because, particularly in a crisis you will need to know each other. you will need to be able to trust each other. >> do you think the u.s. economy is pretty much in control of its own of the inflation rate or are there events outside of the united states like what china is doing or the ukraine war that are affecting inflation and make you nervous about where inflation might be going? >> we have the tools, the fed has the tools to achieve our 2% goal over time but, inflation in the united states is of course very closely related to things

that happen here including the balance between supply and demand. it is also affected by for example commodity prices really set on commodities prices that are set globally. >> you get data from government agencies but go to the supermarket say this price is high? do you ever get anecdotal things? people call you up, friends, by the way you should do this or that? do you get that kind of information? only get it from the government reports? i mostly get data. but i will say, i do believe anecdotal information is very useful. one of the things reserve banks are great at, all 12 have big operations where they talk to businesses, non-profits, universities, every sector

country and the economy. they have talk to them about what they're seeing. staring at data is great. you need to have a story. i think, hearing the stories that people tell, it does help me to sort of, you know, assess -- >> as chairman of the so as chairman of the federal reserve is an important job, how to reduce -- neil: a remarkable change between jerome powell and david rubenstein, making friendly remarks that the 2% goal on inflation, and the process has a long way to go and the inflation fight is on. he's encouraged by the number of jobs coming to the economy but watching how many, now to "the big money show"